Official legislative records and announcements from the U.S. Congress

Judge Failla Pauses SEC's Coinbase Lawsuit, Grants Rare Appeal on Crypto Securities Question

Jan 7, 2025, 08:29 PM

On January 7, 2025, U.S. District Judge Katherine Polk Failla granted Coinbase's motion for an interlocutory appeal in its legal battle with the Securities and Exchange Commission (SEC), effectively staying the SEC's lawsuit against the cryptocurrency exchange. Despite the SEC's strenuous objection, the judge acknowledged conflicting rulings on the application of the Howey test to crypto assets and determined that the case raises novel and substantial legal questions requiring appellate review. The interlocutory appeal, a rare legal move, will allow Coinbase to challenge the SEC's assertions that the company is violating federal securities laws by intermediating transactions involving investment contracts, and thus, securities. The case will proceed to the Second Circuit Court of Appeals, which will consider whether digital asset transactions in secondary markets are subject to securities laws. This development is regarded as a significant legal victory for Coinbase and could have broad implications for the cryptocurrency industry and other defendants in similar SEC enforcement actions.